Indian cement prices

09 February 2004

Cement prices in the Hyderabad state are likely to go up by Rs 15 a bag by the first weekend of March. Amidst allegations of cartelisation, especially from the construction industry in the state, leading cement companies in the state reportedly held a meeting last month to put in place stringent despatch control mechanisms which should see prices go up, sources said.

Cement prices in the state have hovered around Rs 145 a bag in the Hyderabad market since January. Cement prices plunged to a three-year-low of around Rs 85 per bag in August last year and the industry went whole hog to squeeze supplies by observing despatch holidays for a week every month till prices stabilised at Rs 165 in December. January 2004 saw the prices slide to Rs 145 a bag in the Hyderabad market which alone consumes around 175,000t a month.

The industry expects the demand to go up significantly in the near future. With Lok Sabha and state elections on the anvil, the state government is hastening the pace of all pending infrastructure projects within the next two months. Cement companies expect the government segment alone would consume over 40 per cent of the annual despatches in the state.

Denying allegations of cartelisation, cement manufacturers continue to maintain that they have no other option but to keep price at around the Rs160-165 level, if they were not to slip into the red. They even stressed the relevance of a recent Crisil study which observed that for viable operations by any cement unit in the state, the price needed to be pegged around Rs175.